A state Insurance Department “market conduct examination” of the entity that provides liability, auto and public asset coverage to local governments in North Dakota has found some issues with how it handles claims filed against those governments.
The North Dakota Insurance Reserve Fund is a non-profit “risk pool” for those agencies.
But the Insurance Department examination found inconsistencies in how it handles claims – such as not having thorough explanations as to how the claims were handled, and no documentation.
Some of the complaints came from an incident in Mandan, where some homeowners filed claims after a fire hydrant burst, flooding their homes.
Deputy Insurance Commissioner John Arnold told the Legislative Audit and Fiscal Review Committee the Department looked at 299 cases over a three year period. He said one of the biggest issues is some cases did not have a written adjustment report.
A committee member asked if NDIRF was using “best practices.” Arnold replied he would not consider those as "best practices."
"We do expect thorough documentation," Arnold said. "We do expect legal analysis. We didn't see that."
Arnold told the Committee he was not casting blame, or determining if claims decisions were right or wrong. But he had some suggestions for NDIRF.
"Develop proper procedures to insure proper complaint handling," Arnold said. "Adjusters reports should be independent, fact based and free from bias or opinion. Create checklists to insure that claim files are complete. Engage a licensed attorney to conduct and document legal reviews of claims. And implement and document a supervisory review for each claim, prior to closing the file."
Arnold said that would make sure NDIRF is following procedures and all the boxes are checked.
"That would ensure NDIRF members that the claims are being handled appropriately," Arnold said.
NDIRF's new CEO, Keith Pic, also addressed the Committee.
"We are sympathetic," Pic said. "We have empathy for these claimants that have had especially water main breaks and sewer back-ups. No one wants to have that happen."
But Pic said NDIRF has a fiduciary duty to only pay claims that are legally owed by the entity. He said he is looking forward to working with the Insurance Department.
"We want to make sure there is a public trust in what we do, and how we handle the claims," Pic said. "We will work with them to get the recommendations implemented."